Correlation Between Piraeus Bank and Nedbank
Can any of the company-specific risk be diversified away by investing in both Piraeus Bank and Nedbank at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Piraeus Bank and Nedbank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Piraeus Bank SA and Nedbank Group, you can compare the effects of market volatilities on Piraeus Bank and Nedbank and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Piraeus Bank with a short position of Nedbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Piraeus Bank and Nedbank.
Diversification Opportunities for Piraeus Bank and Nedbank
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Piraeus and Nedbank is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Piraeus Bank SA and Nedbank Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nedbank Group and Piraeus Bank is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Piraeus Bank SA are associated (or correlated) with Nedbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nedbank Group has no effect on the direction of Piraeus Bank i.e., Piraeus Bank and Nedbank go up and down completely randomly.
Pair Corralation between Piraeus Bank and Nedbank
Assuming the 90 days horizon Piraeus Bank SA is expected to generate 2.17 times more return on investment than Nedbank. However, Piraeus Bank is 2.17 times more volatile than Nedbank Group. It trades about 0.06 of its potential returns per unit of risk. Nedbank Group is currently generating about 0.05 per unit of risk. If you would invest 161.00 in Piraeus Bank SA on August 28, 2024 and sell it today you would earn a total of 215.00 from holding Piraeus Bank SA or generate 133.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Piraeus Bank SA vs. Nedbank Group
Performance |
| Timeline |
| Piraeus Bank SA |
| Nedbank Group |
Piraeus Bank and Nedbank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Piraeus Bank and Nedbank
The main advantage of trading using opposite Piraeus Bank and Nedbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Piraeus Bank position performs unexpectedly, Nedbank can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Nedbank will offset losses from the drop in Nedbank's long position.The idea behind Piraeus Bank SA and Nedbank Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Nedbank vs. Standard Bank Group | Nedbank vs. Sanlam Ltd PK | Nedbank vs. Absa Group Ltd | Nedbank vs. Bank Mandiri Persero |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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